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​​​Commercial invoice: how to create an invoice document for export?

10-12-2022
Warehouse worker holding documents and scanning the package

One of the most common documents related to international shipping is the commercial invoice, a document that is required to export goods to other countries and is sometimes also referred to as an export invoice.

A commercial invoice is important for all participants in the supply chain – for the seller and buyer, the forwarders, the customs brokers, and also the bank. That’s why the main requirement for a commercial invoice is that it is completed in English so that all the participants in the process can understand the information indicated therein.

What is a commercial invoice?

Commercial invoices are used for calculating the taxes and duties paid in customs clearance and they also serve as proof of sale between exporter and importer. It should not be confused with other documents such as the proforma invoice, customs invoice, packing list or bill of lading.

While it’s not difficult to fill or create a commercial invoice for export, it’s essential that the invoice is created following proper procedure, contains all the necessary elements and is free of any errors.

Even a small error on a commercial invoice can have negative consequences for your business. This is why many traders choose to automate this task, removing any chance of human error.

Human behind the computer drafting an commercial invoice

Filing a commercial invoice isn’t difficult, but must be free of any errors. For this reason, it is often automated.

When is a commercial invoice required?

The commercial invoice should be issued by the seller (exporter) to the customer (importer) before the goods are dispatched.

When a shipment of goods is ready to be dispatched, the exporter prepares all the necessary documents, including the commercial invoice. To avoid any customs issues for the importer with regard to the calculation and application of duties or taxes, the exporter must provide accurate and truthful information about the goods in the commercial invoice.

A mistake in the buyer’s address or name, for example, can lead to failed shipping. Failure to include the description and purpose of the items inside the package might lead to problems with customs.

What information is important on a commercial invoice?

Commercial invoice template in the hand of human

All commercial invoices have a standardized format which means creating an invoice is a fairly straightforward task.

A commercial invoice must contain certain information, including the seller and buyer’s information as well as the terms of delivery and payment. It is essential to indicate the buyer’s name, address and contact details to ensure that the freight does not get held up on the way, and also all the information about the dispatcher in case questions arise during the shipping process.

A description of the goods and the correct HS code (customs code) are important factors in drafting a commercial invoice.

This information gives the state customs service an accurate understanding of what goods are being exported, and the information also helps the buyer to correctly calculate the taxes and customs fees, and then quickly draft all the required customs documents in the country of destination. The information must be truthful and reflect reality.

Customs codes can be checked on the website of the European Taxation and Customs Union.

When shipping goods within the European Union, a customs invoice is not required and is for informational purposes only. You can check the list of EU countries here.

When is a pro forma commercial invoice used?

Commercial invoices are sometimes mistaken for proforma invoices. The main difference between these is that the commercial invoice has an accounting value – the proforma invoice is purely informative.

When the terms of a deal are being agreed upon with a buyer, a pro forma invoice is sometimes drafted – this is a document with preliminary information about the goods exported, which is required for the buyer to make an advance payment.

A pro forma invoice is not an export document, so when dispatching goods abroad, make sure that they are accompanied by a properly drafted commercial invoice, otherwise, the shipment may be delayed at customs.

Step-by-step instructions for completing a commercial invoice

All commercial invoices have a standardized format which means creating an invoice is a fairly straightforward and simple task. The best way to do that is to follow a sample invoice. You should make sure the commercial invoice contains all the necessary fields even when following a sample document, however.

Information that must be included in a commercial invoice:

  1. the invoice number and date of issue
  2. the name and bank details of the seller, as well as their address and contact details
  3. the name, address and contact details of the buyer
  4. the country of origin of the goods (the country in which the exported goods were produced)
  5. the country of destination for the goods
  6. a full description of the goods and the type of packaging
  7. the customs code for the goods
  8. the quantity of the goods and packages in units
  9. the currency used
  10. the value and price of the goods
  11. any additional costs
  12. the conditions of shipment in accordance with Incoterms 2020
  13. the payment terms
  14. exporting date, destination and means of transport
  15. signature of the shipper

Once a commercial invoice is drafted, we recommend sending it to the buyer for approval, so that they can confirm that all information is indicated correctly.

When all conditions are agreed upon and the goods are ready for shipping, prepare 3 copies of the commercial invoice: one for customs in the country of consignment, one for customs in the country of destination, and one for the buyer of the goods. When shipping within the EU, these conditions are not essential.

Last but not least, the commercial invoice should be printed and included with the package in a transparent envelope so customs can verify the package later.

Conclusion

The commercial invoice is a crucial document for all international shipping transactions. It acts both as proof of delivery as well as a mandatory document for any trades that cross borders. While it’s not difficult to create a commercial invoice, any error in the document can lead to your shipping getting cancelled or delayed.